just being dumb now

Primble

i want to say 1000 adverse but its not an option

A product standard material use is 2kg per unit. The standard price is £2.50 per kg.

In January 53000 kg were used at a cost of £136,000. 27,000 units were produced.

What is the materials usage variance


2,500 Favourable
2,500 Adverse
4,000 Favourable
4,000 Adverse

i done (2x27000)-53000

aimeexox

I got 2,500 FAV.

Actual quantity x standard price
53,000 x £2.50 = 132,500

Standard quantity (of actual output) x standard price
54,000 x £2.50 = 135,000

= 2,500 i think...

sdv

Primble wrote: »

A product standard material use is 2kg per unit. The standard price is £2.50 per kg.

In January 53000 kg were used at a cost of £136,000. 27,000 units were produced.

What is the materials usage variance

aimeexox is correct

Try and work out the answers that will help you understand the varience process.

Understand EXPECTED usage and; ACTUAL usage

Expected materaial usage for 27000 units is (27000 x 2kg) = 54,000 Kg
Actual material usage to produce 27,000 units is..............= 53,000 Kg

Reading the above figure is the Usage FAVOURABLE or ADVERSE?

Because we used less material then expected; the varience = FAVOURABLE. (This automatically eliminates 2 adverse answers)

Primble wrote: »

2,500 Favourable
2,500 Adverse
4,000 Favourable
4,000 Adverse

the calculation is (54,000 -53,000) x £2.50 = £2,500 FAVOURABLE

Answer A is correct

stuartander

Keep these questions coming, lol. They good Practice!!!! Im dreading my MAC exam next month

mini_schnauzer

HI

I agree with you Stuartander. I am finding MAC horrible. DFS was a breeze compaired to MAC - it just doesnt click with me for some reason.

A-Vic

ME THREE but we keep practising, MAC has to be the most difficult as yet (which you would expect) and cant even remember anything we did in ecr

Primble

Oh i got confused because it didn't say anything about price variance so ignored the price

anniem

A-Vic wrote: »

ME THREE but we keep practising, MAC has to be the most difficult as yet (which you would expect) and cant even remember anything we did in ecr

I'm exactly the same - can't remember a thing about ECR as I did it sooooo long ago.

My worry about that is when I took ECR I remember reading posts from peeps who took PEV/PCR saying that they had thrown elements of ECR into the PEV/PCR exams. I also remember Steve or Sandy posted that it was reasonable to assume that students should still have this knowledge!!! HA - I WISH!

PGM

Primble wrote: »

i want to say 1000 adverse but its not an option

A product standard material use is 2kg per unit. The standard price is £2.50 per kg.

In January 53000 kg were used at a cost of £136,000. 27,000 units were produced.

What is the materials usage variance


2,500 Favourable
2,500 Adverse
4,000 Favourable
4,000 Adverse

i done (2x27000)-53000

I didn't read the question properly, as usual.....

Total price & usage variance is -1000

but material variance alone is 2500 fav. Always stick to the std cost when working that out.

sdv

PGM wrote: »

Total price & usage variance is -1000

but material variance alone is 2500 fav.

Therefore the price varience must be 3500 ADVERSE

Calaulations to prove that


£136000 divideby 53000kg = £2.56604 per kg

Autual price paid ....= £2.56604
Expected price to pay £2.50

Actual price is greater then expected pricetherefore varience has to be ADVERSE

(2.56604 - 2.50) x 53000 = 3500 ADVERSE

PGM

no I got it to about -1000 in total

The price is advert but material usage is favourable.

sdv

PGM wrote: »

no I got it to about -1000 in total

Can you please explain /show your calculations on how you got -1000?

crispy

Hello,,

Material Usage:

Std 27,000 X 2 = 54,000Kgs x £ 2.50 = 135,000
Act ...................53,000Kgs x £ 2.50 = 132,500
Variance = 2,500 (F)

Material Price:

Std 53,000Kgs X £ 2.50 = 132,500
Act........................... = 136,000
Variance = 3,500 (A)

Total Material Vairance = £ 1,000 (A)

Hope this helps.